Institutional Asset Manager Newsletter 05.05.23

An Indian investment story

India has overtaken China to become the world’s most populous country and with this global record comes the inevitable predictions about what this means for the nation’s economy.
There are now 1.5 billion people living in India and while the population is relatively young, there are concerns about whether there are enough employment opportunities to sustain so many inhabitants.
For the more optimistic, however, India - where more than half of the population are under the age of 32 - represents an opportunity to tap into surging consumer demand and, if there is enough upskilling, the country has the potential to become an economic superpower.
This week we hear from Kalea Power, of emerging markets investment manager EMQQ Global, who after a recent research trip to India finds herself in the optimists’ camp.
Power points to India’s digital revolution, notably advances in payment technology which she says is a gateway to making digital commerce in goods and services available equitably to all Indian citizens.
"[A decentralised ecommerce network] will increase visibility of all merchants, including small and medium sellers that are often digitally excluded, expand choice and improve pricing for consumers, and drive healthy competition and a level playing field in an industry dominated by giants in other markets (think Amazon, Alibaba)," Power says.
Power’s observations follow those made by Rob Brewis, Investment Manager at Aubrey Capital Management in an April story on IAM, who told us that the Indian government’s massive investment in infrastructure alongside considerable foreign direct investment, made the country an attractive proposition.
But according to a report from the Reserve Bank of India (RBI), published this Wednesday, investment will need to be channelled towards green initiatives if the country is to achieve its net zero ambitions.
RBI estimates suggest that green financing requirements in India could be at least 2.5 per cent of GDP annually to address the infrastructure gap caused by climate events.
In other news, IAM spoke to Advent Capital Management’s President and Chief Investment Officer Tracy Maitland who wants investors to wake up to the benefits of investing in convertible bonds.
This may not be hugely surprising from one of the world’s leading convertible bond managers, but he does have a point.
As interest rates continue to rise, so companies are seeking new ways to raise capital and convertible bonds offer a cheaper alternative to the conventional route. At the same time, for investors who have the option to convert their bond into equity once the share price reaches a certain point, there is the chance to minimise market volatility and still participate in the upside.
However, it might be worth getting in quick, since Maitland tells us that while he wants to encourage more investors into the asset class, he’d like to keep convertible bonds an ‘exclusive club’.
Gill Wadsworth, Editor

Copyright © 2022 All Rights Reserved

About | Disclaimer